A Static Budget Report

question 23

Multiple Choice

A static budget report

• A) shows costs at only 2 or 3 different levels of activity.
• B) is appropriate in evaluating a manager's effectiveness in controlling variable costs.
• C) should be used when the actual level of activity is materially different from the master budget activity level.
• D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.

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Definitions:

Commerce

The activity of buying and selling, especially on a large scale, involving transportation and exchange of goods and services.

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type.

Confederation

An organization that consists of a number of parties or groups united in an alliance or league, often referring to a union of states with limited central power.

Sovereign Authority

The ultimate power or authority within a given territory, typically held by a state or monarch, over which no other power can exercise control.